Karnataka State Chartered Accountants Association and Others Versus The State of Karnataka and Others

2016 (4) TMI 175 - KARNATAKA HIGH COURT

Cost accountant v/s Chartered Accountants - nature of work - amendment to Section 63 of the Karnataka Co-operative Societies Act, 1959 - auditing of accounts by Cost Accountants of a firm of Cost Accountants permitted. - Held that:- it is not evident that by virtue of the impugned amendment, a Cost Accountant has been enabled to carry out functions which can only be performed by a Chartered Accountant. This is statutorily governed and there can be no entrenchment on such functions. It is not the .....

Udaya Holla, Senior Advocate for Shri Vivek Holla, Advocate ORDER The facts, as stated by the petitioners, are as follows:- The first petitioner is an Association of Chartered Accountants, registered under the Societies Registration Act, 1860. Petitioners no.2 to 6 are said to be practising Chartered Accountants. The petitioners seek to challenge the amendment to Section 63 of the Karnataka Co-operative Societies Act, 1959 (Hereinafter referred to as the 'KCS Act', for brevity), whereby .....

required the State legislatures to introduce a law with a mandate that every co-operative society shall maintain accounts and audit such accounts in each financial year and such audit was to be done by an Auditor or an Auditing firm. Consequently, the KCS Act was sought to be amended by the Karnataka Amendment Act no.3 of 2013. Section 63 was amended to make auditing of the accounts of co-operative societies compulsory. The auditing was to be assigned to departmental auditors or to Chartered Ac .....

of the Cost and Works Accountants Act, 1959. This action on the part of the legislature, according to the petitioners, permitted Cost Accountants to do the work of auditing thereby encroaching on the profession of Chartered Accountants, which would run counter to the 97th Amendment as well as the Chartered Accountants Act, 1949. The petitioners contend that the State legislature has overlooked the classification of two distinct classes of professionals. A Chartered Accountant is governed by the .....

st accountants are involved in the costing part of financial transactions CAs analyse risk and design efficient financial system Cost accountants assess the feasibility of projects vis-à-vis available funds Attention is drawn to the provisions of the Companies Act, 1956, The Income Tax Act,1961 and the Multi-State Co-operative Societies Act, 2002, where under there are special references to the role exclusively conferred on the Chartered Accountants, all of which fortify the stand of the .....

that in the co-operative sector of the State, there are co-operative sugar factories, co-operative spinning mills, co-operative industrial societies, etc., wherein costing work plays an important role and considering the syllabus, a Cost Accountant has to go through and it was found that even a Cost Accountant has adequate knowledge of Accounting principles and Accounting Systems and taking into account the serious shortage of professionals available for carrying out the audit work of co-operat .....